In the competitive environment of the 1980s, business owners and managers are only too keenly aware of the importance of productivity improvement for survival. From early 1987 to mid 1988, employers and employees under the auspices of the Federal and State Conciliation and Arbitration Commissions conducted enterprise- based productivity bargaining as an integral component of the centralised wage fixing system for the first time.

This nation-wide experiment provided an exciting opportunity to assess the viability of a wide array of productivity measures and their varying methods of implementation. The objective of this Report is to offer such an assessment.

The methodology was qualitative and quantitative. The qualitative measures involved literature research into productivity, supplemented by interviews with 16 people directly associated with the administration and implementation of second tier productivity agreements. Quantitative measures centred on a specially devised numerical classification system for the productivity offsets of 471 Federal agreements and 86 Queensland agreements. The numerical classification system provided the basis for a computer of the data and graphical presentation.

The research indicates that the greatest improvements in productivity will result from offset to improve labour market flexibility and to develop more open management and employee communication. The design of the second tier system militated against the effective use of long-term human resource development trade-offs, while offsets which primarily focused on cost reductions will not have an appreciable or enduring effect on productivity.

Initial assessment of the success with which second tier offsets have been implemented is very favourable, indicating a high degree of commitment from employers and employees. This indicates an unusually low "fall back" rate for productivity bargaining agreements.

It is hoped that this assessment of productivity measures will not only be of value within the context of the second tier, but will indicate problems and opportunities for firms introducing their own productivity programs and provide a guide for further developments within the general ambit of productivity bargaining.